Disney offers to buy Sky News to ease Murdoch’s £11.7bn takeover
The move would untangle the process by leaping over Fox to acquire Sky News directly
Disney would still have to receive regulatory approval if it agrees to buy Sky News
Walt Disney has waded into the long-running dispute over Rupert Murdoch’s influence in UK media by offering to buy Sky News, a move aimed at easing political and regulatory fears that Fox’s acquisition of the TV outlet would deepen the media mogul’s dominance in Britain.
Mr Murdoch would gain full control of the cable news channel if UK regulators approve the planned £11.7 billion takeover of its parent Sky by 21st Century Fox. But the Competition and Markets Authority has signalled it will not recommend the deal because it would concentrate too much power in Mr Murdoch’s hands.
Disney has separately agreed a $66 billion deal to acquire Fox’s entertainment assets – including its stake in Sky, the pay-TV group Mr Murdoch launched in 1989 – although the path to completing that transaction has been stymied by the regulatory delay in the Fox-Sky deal. A surprise offer for Sky from Comcast, the US cable group, at a premium to the Fox offer has further complicated the picture.
Disney’s move on Tuesday would untangle the process by, in effect, leaping over Fox to acquire Sky News directly. In a statement, Fox said Disney’s interest in buying Sky News would stand “whether or not Disney’s proposed acquisition” of Fox moved forward.
Disney’s interest is likely to be welcomed by British regulators. Disney said in a statement it would be willing “to sustain the operating capital of Sky News and maintain its editorial independence” once it took over the news channel. Sky shares rose more than 1 per cent to £13.12 in early London trading.
A Disney deal was one of two options offered by Mr Murdoch to win over the CMA. Fox said it could also separate Sky News from Sky and establish it as an independent company with its own independent board, as well as pledging to fund it for 15 years – five more than it offered two months ago.
This would be similar to the legal separation last year of BT and Openreach, which owns its phone and broadband cable networks.
Fox, which currently owns just 39 per cent of Sky, expressed confidence either option would address the CMA’s outstanding concerns.
“We have proposed a set of solutions that address and resolve any and all questions or concerns that may have been raised by the transaction,” said Gerson Zweifach, Fox’s senior executive vice-president and group general counsel. “We look forward to concluding this acquisition – finally – in a timely and expeditious manner.”
Sky also said the proposals would address regulatory concerns. “Sky believes that both of these remedy proposals comprehensively address any plurality concerns the CMA may have, and would guarantee the long-term future of Sky News and its ongoing editorial independence,” it said.
Fox said it had offered the CMA “personal undertakings” from its executive chairman, Mr Murdoch, and its chief executive, his son, James, “not to influence or attempt to influence the editorial choices made by the head of Sky News”.
“We offered this even though the record before the CMA shows that over the course of nearly 30 years as Sky’s founding shareholder neither [FOX]nor the Murdoch family have ever sought to influence the editorial direction of Sky News,” the company added.
It is unclear whether the new concessions will be enough to convince the CMA, which has taken evidence from critics of the deal, including Ed Miliband, the former Labour leader, and Ken Clarke, the Conservative MP and former UK chancellor. They argue that Mr Murdoch and his family, who also control News Corp, owner of the Sun and the Times, as well as Talksport radio, have too much influence over the UK media market.
“We are aware that a group of politicians that is opposed to the transaction is seeking to influence the CMA and is making a number of unsupported and fanciful assertions,” said Fox, adding that a rejection of its new proposal “would compromise the integrity of a system” by capitulating to political pressure.
Disney would still have to receive regulatory approval if it agrees to buy Sky News. But it has a much smaller presence in the UK media market – it does not own any newspapers, for example – and is unlikely to generate the same political opposition as Mr Murdoch.
Comcast and its chief executive Brian Roberts will be monitoring the interactions between Fox, Disney and UK regulators. It has made a proposal to buy all of Sky, including the 39 per cent owned by Fox – that values the pan-European pay TV group at £22 billion or £12.50 per share, a 16 per cent premium to the £10.75 a share offer from Fox.
– Financial Times Service